A tax haven is a place that allows certain investors or businesses to face very low effective taxes. The term is contested, and low taxation, financial secrecy, and international cooperation do not always occur together.
The term tax haven is often used critically to describe a jurisdiction where non-domiciled investors or companies can obtain very low tax rates. A jurisdiction's headline or official rate may be higher than the tax actually paid after deductions, exemptions, special rulings, or other arrangements.
All flashcards
What is a tax haven?
A jurisdiction commonly described as enabling certain non-domiciled investors or businesses to obtain very low effective tax rates.
What is an effective tax rate?
The tax burden actually experienced in a particular situation after applicable rules and arrangements are considered.
What does base erosion and profit shifting (BEPS) describe?
Arrangements that reduce a company's taxable base in one place and shift reported profits to another.
What is a tax inversion?
A change in a company's legal headquarters to a lower-tax jurisdiction.
What is a special purpose vehicle (SPV)?
A legal entity created to hold assets or carry out particular transactions.
Quiz questions
What distinguishes a naked tax inversion from a merger inversion?Answer: A naked inversion moves without a substantial existing business in the new location.
In the CORPNET framework, what role does a Conduit OFC play?Answer: It channels substantial value from higher-tax economies toward other locations.
How do estimates of annual tax revenue lost differ from estimates of capital held in tax havens?Answer: One estimates a yearly revenue flow; the other estimates the accumulated value of assets.
What is the Common Reporting Standard (CRS) designed to do?Answer: Support automatic exchange of financial account information among participating jurisdictions.
What can be concluded from a person's or company's name appearing in a data leak?Answer: The appearance alone does not establish that the person or company broke the law.
Based on the Wikipedia article Tax haven, licensed CC BY-SA 4.0. Adapted into a summary, flashcards and quizzes.